In fresh trouble to Sahara group, the Supreme Court on Wednesday said that SEBI is free to freeze accounts and seize properties of its two companies for defying court orders by not refunding Rs 24,000 crore (Rs 240 billion) to investors.
The apex court also pulled up SEBI for not taking action against the companies - Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) - as per its August 31, 2012 order, which had asked it to attach properties and freeze bank accounts of the companies.
It issued notice to the group to respond within four weeks why contempt action should not be initiated against the companies for not complying with its order.
"What steps are you taking? You are not taking any action. The judgement tells you what to do but you are not doing it," a bench of justices K S Radhakrishnan and J S Khehar said.
The market regulator submitted that it is taking action and issued notice to the companies and approached civil court in Bombay for freezing bank accounts.
Not satisfied by its contention, the bench said that issuing notice is not enough and that SEBI has to follow its last year's order.
"Why you gave notice and did not take action. You have to execute our order," the bench said.
The bench also made it clear that the proceedings pending before it on contempt plea against the companies would not come in the way of SEBI taking action against the group.
The apex court had on August 31 last year directed the two companies to refund around Rs 24,000 crore to their investors within three months with 15 per cent interest
per annum for raising the amount from its investors in violation of rules and regulations.
In stinging observations against the companies, the court had said that such economic offences must be dealt with "iron hand".
The Sahara group, on the other hand, justified its stand on not refunding the amount and said that large portion of the amount has already been redeemed to investors before the judgement was delivered.
Senior advocate Ram Jethmalani, appearing for the companies, said that nothing is due and it is difficult to deposit Rs 10,000 crore (Rs 100 billion).
The apex court was hearing market regulator SEBI's contempt petition against SIREC and SHIC.
Earlier, the Group had on December 5 got nine weeks time from the Supreme Court to pay back Rs 24,000 crore with 15 per cent interest to over three crore investors in its two companies, with an immediate upfront payment of Rs.5,120 crore (Rs 51.2 billion).
A bench headed by Chief Justice Altamas Kabir had ordered the Group to immediately hand over a demand draft of Rs 5,120 crore to SEBI and said the balance amount shall be deposited with the market regulator in two instalments to be cleared by early February.
SIREC had collected Rs.19,400.87 crore (Rs 194 billion) on March 13, 2008 and SHICL had collected Rs 6,380.50 crore (Rs 63.8 billion). But the total balance on August 31 is Rs 24,029.73 crore (Rs 240.29 billion) after premature redumption.
The group might have to fork out around Rs 38,000 crore (Rs 380 billion) as of now which includes the principal amount of Rs 24,029.73 crore (Rs 240.29 billion) and interest of around Rs 14,000 crore (Rs 140 billion).
Image: Sahara Group Chairman Subrata Roy
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The apex court also pulled up SEBI for not taking action against the companies - Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) - as per its August 31, 2012 order, which had asked it to attach properties and freeze bank accounts of the companies.